Which of the Ratios Listed Helps to Indicate the Average

question 14

Multiple Choice

Which of the ratios listed helps to indicate the average profit on each dollar of sales?

• A) Current ratio
• B) Profit margin
• C) Gross margin
• D) Return on assets

---

Definitions:

Total Cost

The complete cost of production, encompassing both fixed and variable costs, for a good or service.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced; decreases as production increases.

Average Variable Cost

The per unit cost of variable inputs divided by the total quantity of output produced, reflecting the variable cost of production.

Marginal Revenue

The additional income generated by increasing product sales by one unit.